balance sheet and financial disclosure

balance sheet and financial disclosure - THE BALANCE SHEET...

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THE BALANCE SHEET AND FINANCIAL DISCLOSURES THE BALANCE SHEET EQUATION – ASSETS = LIABILITIES + OWNERS EQUITY Limitations: 1.The balance sheet does not portray the market value of the entity as a going concern nor its liquidation value. 2.Resources such as employee skills and reputation are not recorded in the balance sheet. Usefulness: 1.The balance sheet describes many of the resources a company has available for generating future cash flows. 2.It provides liquidity information useful in assessing a company’s ability to pay its current obligations. 3.It provides long-term solvency information relating to the riskiness of a company with regard to the amount of liabilities in its capital structure. Categories are required for Full Disclosure ASSET CATEGORIES I. Current Assets -Will be converted to cash or consumed within one year(usually) or the operating cycle, whichever is longer. Operating Cycle of a Typical Manufacturing Company-cash to inventory to A/R to cash II. Investments and Funds
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This note was uploaded on 12/13/2010 for the course ACCT 112 taught by Professor King during the Spring '08 term at Howard County Community College.

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balance sheet and financial disclosure - THE BALANCE SHEET...

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